The European Commission met on 15 May the government of the Republic of Moldova, led by Prime Minister Leancă.

The meeting took stock of the latest developments in the Republic of Moldova, addressed both sides’ preparations to ensure that the future EU-Moldova Association Agreement delivers growth and stability up to its full potential, and reviewed the state of play with key reforms in Moldova’s justice sector, business environment and energy relations.

This MEMO provides background information on a number of related issues. It is not intended to be comprehensive.

ASSOCIATION AGREEMENT INCLUDING A DEEP AND COMPREHENSIVE FREE TRADE AREA

The EU and the Republic of Moldova will sign on 27 June 2014 an Association Agreement including a Deep and Comprehensive Free Trade Area. This will open a new chapter in EU-Moldovan relations. The Agreement clearly underlines the importance that both sides attach to fundamental values, democracy and the rule of law.

The ambitious Association Agreement will significantly deepen political and economic relations between Moldova and the EU, and give Moldova the opportunity gradually to participate in the EU Internal Market - the largest single market in the world. It focuses on core value-related reforms, on economic recovery and growth, governance and sector cooperation in areas such as, for example, energy cooperation, transport, environment, public health, consumer protection, education, training and youth as well as cultural cooperation.

The EU and the Republic of Moldova finalised the negotiations on this Agreement in June 2013 and initialled it in November 2013 during the Eastern Partnership summit in Vilnius. To implement the Association Agreement in a concerted manner, the EU and the Republic of Moldova will adopt an Association Agenda outlining their jointly agreed reform priorities for the three years following the signature of the Agreement.

As a measure to ease some of the difficulties experienced by the Republic of Moldova with its wine exports to some of its traditional markets, the European Commission proposed on 25 September 2013 to fully open the European Union's market to wine imports from the Republic of Moldovain advance of the envisaged provisional application of the Association Agreement and the related Deep and Comprehensive Free Trade Area. (For more information see IP/13/872).

EU ASSISTANCE TO THE REPUBLIC OF MOLDOVA

The EU assistance to the Republic of Moldova in 2007-2013 amounted to €561 million.

The new programming document (Single Support Framework), adopted on 11 June , will shape EU cooperation with the Republic of Moldova during the period 2014-2017 in three priority sectors: public administration reform, agriculture and rural development and police reform and border management.

Assistance will be also provided to support the implementation of new agreements between the European Union and the Republic of Moldova and the Association Agreement, including a Deep and Comprehensive Free Trade Area (DCFTA). Support to civil society will continue.

Latest cooperation programmes

On 6 May 2014, the European Commission announced a support package for the Republic of Moldova, worth €30 million. (For more information see IP/14/512). This support will help public institutions, citizens and the business community to seize the benefits and opportunities of the Association Agreement with the EU, including the possibility of access to the EU market.

The programme targets the competitiveness of small business, the development of national legislation in line with EU quality standards and promotion of export and investment opportunities, communication and information campaigns on the trade agreement with the EU.

Funding for this package is granted through the 'More for More' mechanism of the new European Neighbourhood Instrument: the multi-country umbrella programme. This mechanism rewards progress in democratic reforms with supplementary financial allocations.

Regular allocations to the Republic of Moldova under the Annual Action Programme 2014 will be adopted in July 2014, in the form of two new programmes worth €101 million, namely support to the reform of the Public Finance Policy sector in Moldova, as well as supporting Agriculture and Rural Development.

NEW FINANCING AGREEMENT ON VOCATIONAL EDUCATION AND TRAINING IN THE REPUBLIC OF MOLDOVA

The President of the European Commission José Manuel Barroso and the Prime Minister of the Republic of Moldova Iurie Leanca signed on 15 May a Financing Agreement to support the Republic of Moldova with €25 million in order to improve the country’s Vocational Education and Training (VET) sector.

The objective of this EU funded budget support programme is to help the government to reform the VET system. Training a more competent and qualified workforce, in line with current and future requirements of the market, could in the long-term help to increase the competitiveness of the national economy, reduce the high unemployment rate and boost job creation.

This EU-funded programme will help to restructure the VET system, in order to increase efficiency and access to professional education, increase the quality of teaching staff, promote modern teaching technologies (such as training materials on web platforms and digital databases, specialised literature and software for 100% of VET institution libraries and new Information and communications technology (ICT) equipment and digital learning materials in the VET network) and training based on competences, in order provide a competitive workforce for national and regional economy that would meet the labour market needs in terms of requirements on both quantity and quality.

In order to fully benefit from the opportunities offered by the upcoming Deep and Comprehensive Free Trade Agreement (DCFTA), Moldova needs a well-qualified workforce. This programme will support Moldovan efforts in that direction.

Financing agreement signed on 15 May 2014 followed just over a week after the European Commission announced additional support package for the Republic of Moldova worth €30 million to help public institutions, citizens and the business community to seize the benefits and opportunities of the Association Agreements with the EU, including the possibility of access to the EU market (see previous section).

MOLDOVA VISA-FREE REGIME

On 28 April visa-free travel became a reality for the citizens of the Republic of Moldova with a biometric passport (STATEMENT/14/137).

The Schengen area visa waiver allows Moldovan citizens who hold a biometric passport to travel to the Schengen zone for short-stays without needing a visa. The upgraded Visa Facilitation Agreement continues to apply to the holders of non-biometric travel documents.

The EU-Republic of Moldova Visa Liberalisation Dialogue was launched on 15 June 2010 and the Visa Liberalisation Action Plan (VLAP) was presented to the Moldovan authorities in January 2011 (IP/11/59). Three years later the Republic of Moldova has become the first Eastern Partnership country to be transferred to the list of non-EU countries whose nationals are exempt from visa requirement.

This shows that the efforts by the Moldovan authorities have paid off and that the EU is committed to deliver on its engagements. Building on the successful reforms implemented so far, it is important to ensure sustained progress, notably in areas such as the prevention and fight against corruption, including high-level one.

The number of short-stay Schengen visa applications from citizens of the Republic of Moldova has remained stable over the past four years (oscillating between 50 000 and 55 000). At the same time, the refusal rate for visa applications has sharply decreased from 11.4% in 2010 to 4.8% in 2013.

ENERGY: UNGHENI-IASI GAS INTERCONNECTOR

With Moldova's high dependency on the energy imports and specifically 100% gas imports reliance on one single supplier and no storage capacities, no access to LNG and no interconnections with EU Member States, the construction of the additional gas links has been a priority for enhancing Moldova's security of supply.

The first step is the Iaşi (Romania) – Ungheni (Moldova) interconnector. The 42 km long interconnector is the first and only direct gas pipeline connecting Moldova and the EU and for the very first time in history, Moldova will be able to get gas directly from the EU and international markets. The "Ungheni-Iaşi pipeline" will have a maximum transportation capacity of 1 billion m3/annually, covering around 1/3 of the gas consumption in Moldavia. In conjunction with compressors and a new 130-km-long-pipeline to be built, the new gas interconnector will deliver gas to the capital Chisinau.

The EU is supporting it both politically and financially: On 27 August 2013 the launch of the works for the realisation of the gas interconnector between Ungheni (West of Moldova) and Iaşi (East of Romania) has been inaugurated with participation of EU Energy Commissioner Oettinger. €7 million (roughly 25% of total costs) are provided via the European Neighbourhood Policy Instrument (ENPI) Cross Border Cooperation (CBC) Ukraine-Moldova-Romania programme.